4.4.1 RSD/USD Soft Peg

While not relying on a “hard” pegging mechanism as described above, RSD does provide a “soft pegging” mechanism, allowing its holders to use the US Dollar as a reference when pricing goods and services in RSD. This soft peg is supported by the following factors:

1. RSD deficits convert 1:1 into debt denominated in US dollars if not paid in time.

2. Staking requirements and transaction fees are paid in SOURCE, but are calculated using USD as a reference. If a 1000 RSD credit line requires a 20% SOURCE stake to be underwritten, this 20% will be calculated using the SOURCE/USD price as a reference. Meaning that a 1000 RSD credit lines would require a $200 stake, payable in SOURCE only. The same holds for transaction fees, which are paid in SOURCE but are denominated as a percentage of the transacted RSD amount.

3. SOURCE reimbursements paid to RSD savers are likewise calculated as if 1 RSD equals 1 USD.

This “carrot and stick” arrangement organically drives members to regard their RSD balances, positive as well as negative ones, as akin to USD balances, and consequently to price their goods and services within the network accordingly.

It should be noted however, that this soft peg is not an absolute necessity. It is completely possible to run instances of ReSource protocol in which the network’s stable credit is completely de-tethered from any external asset.